Facts of the Case

The petitioner, M/s. Balaji Enterprises, filed a writ petition challenging an order dated 20.04.2022 passed by the respondent authority provisionally attaching its bank accounts maintained with IndusInd Bank.

The impugned order was broad in scope, extending not only to specified bank accounts but also to any other accounts operated by the petitioner. Additionally, attachments were extended to accounts of family members and related entities.

The petitioner contended that such attachment was arbitrary and beyond the statutory powers under the CGST Act.

Issues Involved

  1. Whether the provisional attachment order under Section 83 CGST Act was validly issued.
  2. Whether such attachment could extend to family members and related entities.
  3. Whether the attachment continued to remain operative after one year. 

Petitioner’s Arguments

  • The impugned order lacked “reason to believe”, which is a mandatory requirement under Section 83.
  • The attachment was excessively broad and arbitrary in nature.
  • Section 83 does not authorize attachment of:
    • Accounts of family members
    • Accounts of unrelated entities
  • The order violated statutory limits and procedural safeguards. 

Respondent’s Arguments

  • The respondent submitted that:
    • The impugned order had already ceased to operate.
    • Under Section 83(2), a provisional attachment automatically expires after one year.
  • Therefore, no further adjudication was necessary.

Court’s Findings / Order

The Delhi High Court held:

  • The provisional attachment order dated 20.04.2022 had ceased to be operative by virtue of Section 83(2) of the CGST Act.
  • The Court directed that:
    • The petitioner shall not be impeded from operating its bank accounts.
    • Banks shall not obstruct operations based on the expired attachment orders.

Important Clarification by the Court

  • Provisional attachment under Section 83 is not indefinite.
  • It automatically lapses after one year, unless otherwise sustained by law.
  • Authorities cannot continue to rely on expired attachment orders.
  • Banks must allow normal operations once the attachment ceases.

Link to download the order - https://delhihighcourt.nic.in/app/showFileJudgment/VIB30052023CW103252022_153921.pdf

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